Four crops ‘show resilience in pandemic’

Saturday March 13 2021
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By Alex Nelson Malanga

Dar es Salaam. While the World Trade Organization (WTO) predicts that the coronavirus pandemic will dampen world trade in the range of nine to 14 percent in 2020, the outlook of Tanzania’s exports of avocados, spices, tea and coffee remain promising, a new report says.

However, exports of these four crops are projected to be lower than in a situation without the Covid-19 pandemic, according to a report titled ‘Tanzania’s Trade in Times of Covid-19: an Analysis for the Avocado, Coffee, Spices and Tea Sector’. The report - prepared by the International Trade Centre (ITC), and co-funded by the European Union and thr East African Community (EAC) - estimates that the losses are relatively small.

This, the report explains, is mainly because Tanzania’s economy is projected to experience positive gross domestic product (GDP) growth in 2020, while that of the world is expected to drop.

World Bank forecasts that Tanzania’s economy would grow by 5.5 percent in 2021 – up from its earlier estimate of 2.5 percent for last year.

After shrinking 4.3 percent in 2020, the world economy is projected to grow by four percent this year.

The ITC also banks its projections for the sectors’ promising future on the fact that agricultural trade is generally more crisis-resistant, as consumption patterns do not adapt as strongly as it does for manufactured goods.

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Furthermore, it attributed the bright prospects to significant untapped export potential that exists in several markets.

“Tanzania holds important export growth potential in these products that can be unlocked subject to targeted trade advisory and promotion,” reads the report in part. This, according to the report, would help overcompensate for the expected losses of $3.8 million.


Avocados

The report says in 2024, avocado exports are expected to be only about one percent lower than in a situation without the pandemic.

Export potential values for 2024 suggest that most of Tanzania’s opportunities to increase avocado exports lie in Europe.

The founder of GBRI - a horticultural firm in Iringa - Ms Hadija Jabiri, said it was possible that avocado exports would continue on their pre-2020 growth path despite the Covid-19 pandemic - but only if the challenge of high logistics costs was addressed.

“Customers keep asking for avocados. What has changed is just logistics costs, with air travel doubling and or tripling compared to the pre-pandemic’s average of $1.5 per kilo,” Ms Jabiri told The Citizen in a telephone interview.

The most important market for avocado is The Netherlands, with an untapped potential of $1.8 million, according to the report. Second is France. Other markets with large untapped export potential include Japan, Switzerland, Spain, Germany, the UAE and China.

The report shows that Tanzania’s total untapped export potential amounts to $8.7 million: more than 10 times the amount expected to be lost due to Covid-19.

Also, the existing exports to The Netherlands and France indicate that Tanzanian exporters have the ability to comply with the requirements of European markets.

Going by the 2019 ITC business survey on non-tariff measures (NTMs) conducted in Tanzania, 88 percent of avocado exporters face difficulties with NTMs. Key challenges, the report says, include product certification, high packaging costs and quality standards.


Coffee

Regardless of the Covid-19 pandemic, Tanzania’s coffee exports are projected to rise continuously over the coming years.

In 2020, the report says, they are expected to reach $204 million - and in 2021, will outperform their record value of $218 million from 2011. Tanzania’s untapped export potential in coffee is about $91 million. Opportunities to increase exports exist in European markets such as France, Switzerland, the Netherlands, Germany and Spain.

African Fine Coffee Association chairman Amir Hamza told The Citizen that, to tap the potentials, exporters need to add value to their coffee before exporting same.

He said Africa produces about ten percent of the world’s coffee - and exports nearly 90-95 percent in raw/green beans form.

Hamza said Africa consumes 20+ percent of the total world coffee production, suggesting that value addition is done outside African coffee producing countries.

“Due to low coffee prices the only solution is value-addition,” said Mr Hamza, who doubles as chairman of the National Quality Association of Tanzania.

He said even before the pandemic the world prices had gone down from around $1,500-1,800 per ton to $1,100, before climbing to $1,400.


On the other hand, the report singles out difficulties to comply with voluntary standards and testing requirements as one of the current impediments to unleashing the potential coffee exporters hold in European markets.


Spices

Exports of spices, which plummeted in 2019, are projected to pick up again in 2020, and follow a solid growth path over the coming years.

However, if demand for spices in India decreases accordingly, it may considerably slow down Tanzanian export growth, as India accounts for almost half of spices exports.

The fear in caused by the revised Gross Domestic Product (GDP) projections for India published by the International

Momentary Fund (IMF) in June 2020---which is less optimistic than those of April 2020 used for the projections.

Tanzania’s export potential in spices is driven by cloves, the only important export product at the moment.

The potential concentrates in three Asian markets: India, Indonesia, and Singapore.

Between 24 percent and 32 percent of this export potential remains untapped.

Other destinations with large export potential are the United Arab Emirates and the United States, in which 80 percent of export potential is still untapped.

In Africa, according to the report, Tanzanian spices exporters may explore the Nigerien market that offers room to grow exports by $1 million.

Opportunities in the EU are negligible at the moment, due to low demand for cloves.

However, Tanzania could try to diversify its spices exports towards new products such as pepper and ginger, for which demand in the EU is much larger than for cloves.

Frequently mentioned NTMs that are perceived as burdensome by Tanzanian spices’ exporters include lengthy and costly export and product certification processes.

Furthermore, it seems difficult for some spices’ exporters to meet the product quality requirements, with the report putting the blame on lack of first information and inadequate equipment to comply with the standards.


Tea

After dropping in 2018 and 2019, tea exports are expected to rise to $38 million in 2020 – higher than ever before, the report shows.

They are predicted to increase further thereafter, and reach almost $54 million in 2024.

Kenya is the country with the highest total and untapped export potential for bulk tea from Tanzania.

With $14 million, 40 percent of Tanzania’s untapped export potential is located in its neighbor country, known for its blending and packaging capacities for overseas exports.

Other markets with high untapped potential are located in Asia: China ($2.9 million), Japan ($2.9 million), Hong Kong SAR ($2.5 million), Pakistan ($2.3 million) and the United Arab Emirates ($2.1 million).

Germany is the most important market in the EU, holding potential for additional Tanzanian tea worth $633,000.

Some 63 percent of interviewed Tanzanian tea exporters report difficulties with NTMs, especially with product certifications and export permits.

Several survey respondents reported problems with the recognition of the certificate of origin when exporting to Kenya, which poses a challenge to the preferential market access for which Tanzanian tea exporters can apply.

However, the ministry of Industry and Trade says it had conducted a number of reforms between 2015 and 2020 in a deliberate move to rectify the situation.

The reforms include implementation of the blueprint for improving Tanzania’s business climate that saw the scrapping of 173 fees and charges in different sectors, according to Mr Freddy Kavula who is a trade officer of the ministry.

The government has also harmonised the roles of Tanzania Bureau of Standards and Tanzania Medicines & Medical Devices Authority as a way of reducing hurdles that traders had to go through.